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Investor Optimism surges in December, according to UBS Index
Majority of Investors Believe Now is a Good Time to Invest in the Financial Markets
NEW YORK, December 20, 2004 - Optimism rose again this month, with investors continuing to express more confidence in the economy and their personal investments, according to the UBS Index of Investor Optimism, a joint effort of UBS and the Gallup Organization.
Currently at 79, the overall index rose 10 points this month, up from 69 in November. Conducted monthly, the Index had an initial baseline of 124 when it was established in 1996.
The increase can be attributed to a 9-point increase in the Index's personal dimension, which measures investors' confidence in their ability to reach investment targets and maintain income, all of which scored higher this month. It also is driven by a 1-point increase in the Index's economic dimension, which measures investors' sentiment on economic growth, unemployment, stock market performance and inflation. Of those surveyed:
- 59 percent expressed confidence in their ability to reach investment targets during the next 12 months, up 4 percentage points from last month and down 1 from a year ago.
- 69 percent report they are optimistic that they'll achieve investment targets during the next five years, up 4 from last month and down 2 from a year ago.
- 63 percent say they are optimistic in their ability to maintain income during the next 12 months, up 3 from last month and down 4 from a year ago.
- 44 percent are optimistic about unemployment, up one point from last month and down 8 from a year ago.
- 53 percent say they are confident in the prospects for economic growth in the next 12 months, down 2 from last month and down 14 from a year ago.
- 51 percent report they are optimistic about the stock market's performance, down 4 from last month and down 15 from a year ago.
- 40 percent are optimistic about inflation, unchanged from last month and down 9 from a year ago.
Average expectations for return during the next 12 months rose to 11.2 percent from 10.5 percent in November, and 64 percent believe now is a good time to invest in the financial markets, up 4 points from last month.
According to the Index, 59 percent consider the economy to be in either a sustained expansion or recovery, compared with 55 percent last month. Conversely, 40 percent believe the economy is either in a slowdown or recession, compared with 43 percent last month. Of those who characterize the economy as being in a slowdown or recession, 75 percent believe it will be at least two years before the U.S. economy is on the way to recovery, up from 71 percent last month.
This month, investors were asked about factors affecting the investment climate. The majority, 61 percent, cites the outsourcing of jobs to foreign countries as hurting the markets a great deal. The second most important factor, according to 59 percent of those asked, is the price of energy.
In addition, investors were polled about their top priorities for Congress and President George W. Bush in 2005. An overwhelming 84 percent of investors believe reducing the federal budget deficit should be the top priority and 76 percent report that increasing health care coverage for Americans who have no coverage should be the highest priority. In addition, 59 percent of investors cite reforming Social Security as the top priority and 50 percent believe the government should focus on cutting taxes or reforming the tax system.
On the issue of the declining value of the dollar, 77 percent of investors said the recent decrease is hurting the economy, while only 7 percent reported that the lower value is a benefit to the economy. Additionally, 39 percent expect to spend less on imported goods and overseas travel as a consequence of the devalued dollar and 54 percent say they will not be affected by the lower dollar value.
These findings are part of the 80th Index of Investor Optimism, which was conducted November 1 to November 14. To track and measure Index changes on an ongoing basis, new samplings are taken monthly. Dennis J. Jacobe, research director for Gallup, said the sampling included 801 investors randomly selected from across the country. For this study, the American investor is defined as any person who is head of a household or a spouse in any household with total savings and investments of $10,000 or more. Nearly 40 percent of American households have at least this amount in savings and investments. The sampling error in the results is plus or minus four percentage points.
For more than 60 years, the Gallup Organization has been a recognized leader in the measurement and analysis of people's attitudes, opinions and behavior. While best known for the Gallup Poll, founded in 1935, Gallup's current activities consist largely of providing marketing and management research, advisory services and education to the world's largest corporations and institutions.
UBS is one of the world's leading financial services firms. In the United States, it is the third largest private client business with a client base of more than 2 million investors. UBS's client and financial advisors provide a comprehensive range of services customized for wealthy individuals, ranging from asset management to estate planning and from corporate finance to art banking. Its American network of financial advisors manages roughly 634 billion Swiss francs in invested assets and provides sophisticated services through consultative relationships with affluent and high net worth clients. In Switzerland and internationally, UBS has more than 140 years of private banking experience, an extensive global network of 164 offices and nearly 701 billion Swiss francs in invested assets.
Additional information about the Index of Investor Optimism can be found at
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